The Finance Ministry has urged non-life insurance companies to work more closely with state governments to build public trust and policy awareness, especially in the wake of increasing natural disasters and health emergencies. The directive follows a comprehensive review of the Pradhan Mantri Fasal Bima Yojana (PMFBY) and other government-backed schemes, where low claim settlement rates and poor outreach were identified as persistent challenges.
Core Development
The Ministry directed insurers to adopt joint awareness and capacity-building programs with state authorities to improve policy penetration and claim efficiency.
Non-life insurers were asked to:
Strengthen grievance redressal mechanisms.
Use digital claim-tracking tools for transparency.
Improve coordination with district-level disaster and agricultural offices.
The meeting also reviewed the performance of crop, health, and property insurance portfolios, where low claim awareness continues to affect rural policyholders.
Officials emphasised that insurers must prioritise trust-building to counter perceptions of delayed payouts and complex procedures.
Key Drivers / Issues
Slow claim processing under government insurance schemes.
Lack of coordination between insurers and state governments during disasters.
Low insurance literacy and digital inclusion in rural India.
The need to make insurance a trusted safety net, not a compliance obligation.
Stakeholder Impact
For insurers, stronger state collaboration means improved data access, outreach, and credibility. Policyholders, especially in rural and semi-urban regions, can expect faster claim settlements and clearer communication. Governments benefit from enhanced coordination during natural calamities and welfare disbursements.
Industry & Policy Reactions
Insurance executives welcomed the directive, noting it aligns with IRDAI’s “Insurance for All by 2047” vision. Analysts said that insurer–state partnerships are essential for achieving universal coverage and building confidence in public sector schemes.
Challenges Ahead
Building consistent cooperation between central, state, and local authorities.
Training state-level officials on digital claim systems.
Balancing commercial sustainability with social insurance mandates.
Strategic Outlook
The government’s push for closer coordination reflects a larger vision of inclusive risk protection, where insurance becomes an integral part of India’s social and economic safety infrastructure. The future focus will be on digital integration, transparency, and trust to drive adoption.
Why This Matters
By strengthening cooperation between insurers and states, the government aims to make insurance more accessible, transparent, and trustworthy, helping protect millions of citizens against financial shocks.
